The municipal market was firmer by about two or three basis points overall yesterday, as the last of the week's sizeable new issues were priced in the primary market and participants looked ahead to the long holiday weekend.
In the new-issue market yesterday, Ramirez & Co. priced $435.3 million of lease revenue bonds for the California State Public Works Board in four series.
Bonds from the $183 million Series A mature from 2010 through 2029, with a term bond in 2034. Yields range from 1.90% with a 4% coupon in 2010 to 6.45% with a 6.25% coupon in 2034. Bonds from the $107.6 million Series B mature from 2010 through 2029, with a term bond in 2034. Yields range from 1.90% with a 4% coupon in 2010 to 6.40% with a 6.5% coupon in 2034.
Bonds from the $90.4 million Series C mature from 2010 through 2027, with term bonds in 2029 and 2034. Yields range from 1.90% with a 4% coupon in 2010 to 6.45% with a 6.25% coupon in 2034. Bonds from the $54.3 million Series D mature from 2010 through 2029, with a term bond in 2034. Yields range from 1.82% with a 4% coupon in 2010 to 6.40% with a 6.25% coupon in 2034.
All the bonds are callable at par in 2019, and are rated A1 by Moody's Investors Service and A-minus by Standard & Poor's and Fitch Ratings.
Goldman, Sachs & Co. priced $303.7 million of sales-tax secured bonds for New York's Nassau County Interim Finance Authority. The bonds mature from 2009 through 2025, with yields ranging from 1.00% with a 2% coupon in 2010 to 4.57% with a 4.5% coupon in 2025. The bonds, which are callable at par in 2019, are rated Aa2 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.
Traders said tax-exempt yields in the secondary market were lower by about two or three basis points.
"It's a quiet day, but we're a little firmer," a trader in Los Angeles said. "There's been a little more activity in the serial range today, which has been kind of nice. The market just has a general good feel about it."
"We're better a good couple basis points, but it's quiet," a trader in New York said. "Probably seeing a bit more firmness on the long end, maybe three or four basis points better if you go out 30 years or so, but overall I'd call it better by about two basis points, maybe three. Bonds are definitely cheapening up a bit today."
The Treasury market was somewhat mixed yesterday. The yield on the benchmark 10-year note, which opened at 2.89%, was quoted near the end of the session at 2.85%. The yield on the two-year note was quoted near the end of the session at 0.94% after opening at 0.91%. The yield on the 30-year bond, which opened at 3.72%, was quoted near the end of the session at 3.66%.
As of Tuesday's close, the triple-A muni scale in 10 years was at 109.6% of comparable Treasuries, according to Municipal Market Data. Additionally, 30-year munis were 128.2% of comparable Treasuries. Also, as of the close Tuesday, 30-year tax-exempt triple-A rated general obligation bonds were at 137.5% of the comparable London Interbank Offered Rate.
Elsewhere in the new-issue market, Anne Arundel County, Md., competitively sold $144.6 million of consolidated general improvement GO bonds to Wachovia Bank NA in two series.
Wachovia won the $115.4 million Series 1 with a true interest cost of 3.50%. The bonds mature from 2010 through 2029, with yields ranging from 1.17% with a 4% coupon in 2012 to 4.52% with a 4.5% coupon in 2029. Bonds maturing in 2010, 2011, and 2016 were not formally re-offered. Wachovia also won the $29.2 million Series 2 with a TIC of 4.23%. The bonds mature from 2010 through 2026, with term bonds in 2029, 2034, and 2039. Yields range from 0.64% with a 2.5% coupon in 2010 to 4.52% with a 4.5% coupon in 2029. Bonds maturing in 2034 and 2039 were not formally re-offered. All the bonds are callable at par in 2019, and they are rated Aa1 by Moody's, AAA by Standard & Poor's, and AA-plus by Fitch.
Pennsylvania's Temple University competitively sold $120 million of funding obligation notes to Goldman Sachs with a net interest cost of 0.42%. The notes mature in April 2010, with a 1.25% coupon. The notes were not formally re-offered. The credit is rated MIG-1 by Moody's.
In economic data released yesterday, merchant wholesalers posted a 1.5% decrease in inventories in February, while sales climbed 0.6% in the month. Inventories of merchant wholesalers slid to $419.9 billion, following a revised 0.9% decrease to $425.9 billion in January. Sales from merchant wholesalers rose to about $319.7 billion, following January's revised 2.4% decrease to $317.7 billion. Economists polled by Thomson Reuters predicted a 0.2% decrease in wholesale inventories.
Federal Open Market Committee members said downside risks to the economy will prevail in the short term, according to minutes from its March 17-18 meeting that were released yesterday. Economic activity fell sharply in the months leading up to the meeting, the minutes noted.
During the decision to purchase Treasury securities and agency debt, FOMC members saw a low risk to the Fed's credibility in the face of weakening economic conditions "so long as the Fed was clear about the importance of its long-term price stability objective and demonstrated a commitment to take the necessary steps in the future to achieve its objectives," according to the minutes.
